Introduction
Losing a loved one is an emotional experience, and amidst the grief, practical matters like managing their financial assets can seem overwhelming. These issues often appear insurmountable during the emotional aftermath of a loved one’s death. Depending on the person’s social and family dynamics, the death of a loved one can often give rise to much confusion and disagreement over identifying, protecting and distributing assets and funds belonging to the deceased. Persons describing themselves as heads of family, creditors, executors, next-of-kin, administrators, etc either attempt to seize the mandate over the property or they sometimes have duties they never anticipated now placed on them.
People are often at a loss regarding the processes involved and the way forward, and they are often misled as to what the law says because of common misconceptions and the influence of popular media, particularly when one considers that the processes to be undertaken and the principles involved vary depending on factors like the nature of the assets held by the deceased, whether the deceased died with a will, the existence of beneficiaries of the deceased and the existence of creditors amongst others. This article seeks to look at an aspect of these processes, particularly the protection and distribution of funds held by third party institutions such as banks and insurance agencies on behalf of the deceased.
Quite often, the deceased person may have held funds in some kind of account during their lifetime. These could include, but are not limited to, funds held in a traditional bank account, savings and investment accounts with financial institutions, retirement accounts such as pensions or provident funds, and life insurance policies. In addition, the deceased may have participated in cooperative societies or credit unions, which often hold dividends, shares, or savings on behalf of their members. There may also be more specialized accounts, such as trust funds, educational savings plans, or endowment policies. Other examples could include digital wallets or cryptocurrency holdings, which are becoming increasingly common in the modern financial landscape. There is often a fair bit of confusion that arises regarding how these funds should be distributed upon their death. Such confusion can be for a variety of reasons. These include the ignorance of the representatives over the existence of such accounts, the dissipation of the funds where the account is held jointly or where a specific person, often a particular spouse or child, has access to the accounts and dissipates the funds for themselves.
As a preliminary point, it must be stated that, subject to certain legal conditions considered below, funds held by these institutions constitute personal property of the deceased person and forms part of the estate of the deceased person. These funds, being personal property, are subject to distribution according to the laws governing succession. Whether the deceased left a will[1] (testate) or died without one (intestate),[2] these assets must be managed and distributed according to the legal processes established for handling estates.
Where the deceased died with a will, the person(s) appointed as executor(s) under the will must apply to the relevant court for probate. Once such probate is granted, the executor is legally bound to manage and distribute the estate in accordance with the dictates of the will and law. Where the deceased died without a will or where the will fails to provide for some property owned by the deceased, the estate or the remainder not covered by the will must be distributed pursuant to the rules on intestacy as provided under the Intestate Succession Law, 1985 (PNDCL 111). Here, the beneficiaries stated under PNDCL 111 may apply to a competent court to be granted letters of administration.
The second preliminary point worthy of note is what amounts to a will or, at the very least, a testamentary disposition. Per renowned jurist, James Kent,[3]:
“A will is the disposition of real and personal property to take effect after the death of the testator. When the will operates upon personal property, it is sometimes called a testament, and when upon real estate, a devise; but the more general and the more popular denomination of the instrument, embracing equally real and personal estate, is that of last will and testament.”
Thus, the most basic definition of a will is a document or an instrument within which a person states how their property should be disposed of following their death. A will is said to be a declaration of intent of the testator[4] and it only takes effect upon the death of the testator.[5] Thus, its provisions are referred to as testamentary dispositions. Once a will meets the validity requirements of the jurisdiction[6] in which it is intended to be enforced, it is admittable to a grant of probate pursuant to the relevant law of the said jurisdiction. Note however, that in the Ghanaian jurisdiction, even when the instrument fails to meet the validity requirements of a will under the Wills Act, but still contains testamentary dispositions ostensibly from the deceased person, the document may still be enforced by way of an application for Letters of Administration with Will Annexed subject to the provisions of the Administration of Estates Act, 1961, Act 63[7] by a beneficiary under the will or a beneficiary of the estate under intestacy.[8] This acts to save a will that would have otherwise been valid but for a few technicalities or errors in execution.
Having understood the basics of testamentary dispositions, one would naturally wonder the kinds of documents that could be considered to fall under this category. This is the point where the role of the next-of-kin becomes relevant. As part of KYC processes,[9] banks and financial institutions will, amongst other things, often require a prospective client to designate an individual as their next of kin. This person is often noted to be the first point of contact for the institution should it have difficulty in contacting the account holder such as in an instance where the holder is deceased. The account holder provides the contact information of the next of kin. There’s a common misconception that being named as next-of-kin entitles a person to receive or inherit the funds upon the passing of the account holder.
This general belief was considered by the oft-eulogised Koranteng-Addow J. of blessed memory in the 1973 case of In Re Appiagyei-Danka (Deceased.); Appiagyei-Danka And Another v. Appiagyei-Danka[10]. In that case the deceased, a lecturer of the University of Science and Technology, Kumasi,[11] had named his mother as his next of kin on the nomination form used in joining the superannuation scheme for lecturers of the university. Upon his unfortunate passing, his mother applied to the court for the superannuation benefits to be paid to her. The core issue to be determined was whether the said nomination as next-of-kin should be construed to be proof of an intention to so transfer the funds to his mother. Her Legal Counsel, L. B. Akainyah Esq., argued for Section 14 of the Wills Act to be applied to the matter. This section states:
- Notwithstanding anything in this Act or any other enactment, where a person takes out a policy of life insurance on his life for a sum which is expressed on the face of the policy to be for the benefit of a member of his family then, unless the nomination of that member is expressly revoked by a will duly made in accordance with this Act or in any other manner approved by the contract of insurance, upon the death of the insured person, the sum assured shall not form part of his estate but shall, subject to the provisions of this section, be paid to the person so nominated. (Emphasis is mine)
The learned Justice of the High Court held against applying Section 14 of the Wills Act to the facts in the matter before her. She based her decision on the rationale that the designation of the mother of the deceased as next of kin did not, without more, amount to proof that the deceased had intended to devise the funds to her upon his death. She stated thus:
“By looking at the nomination paper (exhibit B) I cannot find any indication on it that the next-of-kin named is to be the beneficiary under the scheme. Next-of-kin is a person’s nearest blood relation and, as deposed to by the assistant registrar, the object of the university in requiring the making of such nomination is to assist the university to trace and contact the relatives of a deceased participant. I accept that evidence. If the university had intended that whoever is named in the nomination paper as the next-of-kin should be the beneficiary there is no doubt that the form would have said so. I have myself seen a type of nomination form in which it is stipulated that the person or persons named should be the beneficiary or beneficiaries under a similar scheme. On that form the proportions in which the beneficiaries are to take were indicated. That type of nomination form came from the Railways and Harbours Administration in a case the title of which I cannot at the moment remember. The nomination aper in this instant case is not of that type. It only has among other things a column for naming the next-of-kin and it stops there.”
Thus, the learned Justice held that a document falling under Section 14 must not only name the individual but must also state that the person is to take the money as beneficiary upon the demise of the account holder.
It is important to note the latter parts of Section 14 above. Per the section, where the conditions precedent are met, the amount no longer forms a part of the Estate of the deceased and becomes the entitlement of the named beneficiary. This means that a person who is named as a beneficiary or named as a person to whom payments should be made under a life insurance policy needs not apply to a court for Probate or Letters of Administration to entitle them to recover the sums. They are entitled to the amount as of right. This principle was at the core of the dispute in the Court of Appeal decision of Ama Serwah V. Yaw Adu Gyamfi and Vera Adu Gyamfi (2018).[12]
The facts of this case do provide some intrigue. In this case, the Appellant, AS, a widow residing in Kumasi, claimed that her deceased husband’s pension benefits from Italy, intended for her and her three children, were fraudulently diverted by her brother in law, YA, and his wife, VA, who were the Respondents in the case. AS authorized YA, her late husband’s brother, to assist with processing the pension benefits since she could not travel due to pregnancy. However, she later discovered that YA and VA had opened an account using her details and fraudulently collected the benefits. AS reported the matter to the police, alleging they had diverted $113,000. The Respondents denied the allegations, stating that the funds were not pension benefits but insurance compensation for the deceased, and YA, as the next-of-kin, was entitled to the payments. They claimed that AS and her children were only receiving the funds as beneficiaries because YA had chosen to include them and they denied any fraudulent actions. They explained that when payments ceased due to lack of document renewal, YA resumed payments using a new account, which the Appellant later contested.
The core issue to be determined by the court was the capacity of the Appellant. The trial judge had dismissed the Appellant’s claim for lack of capacity on the basis that the amounts in question constituted part of the Estate of her deceased husband, and thus, she could only sue in her capacity as an administrator following a valid grant of letters of administration.[13] The Appellate Court, in overturning the ruling of the trial court, held that the funds were not part of the Estate of the deceased, but rather, the legal and contractual entitlement of his spouse and children. Accordingly, the Appellant did not have to first obtain Letters of Administration to recover the amount. Although Section 14 of the Wills Act was not mentioned, it is clear that its provisions were applied in this matter.
Having considered the legal principles advanced above, the position of the law can arguably be summed up as follows: where a person creates an account with funds held by an institution of whatever description and said person designates a person as a beneficiary to whom those funds should be paid upon the death of the person, the stated beneficiary is entitled to receive those funds upon the passing of the individual. (The property no longer belongs to the Estate of the deceased and therefore, the stated beneficiary does not have to apply to the court for Probate or Letters of Administration.) Any other funds held by an institution on behalf of a deceased person, i.e. those without a stated beneficiary upon death, form part of the Estate of the deceased and can only be released by the institution following the grant of Probate, where the deceased left a will, or Letters of Administration, where the deceased left no will or failed to provide for those funds in their will.
It is thus of utmost importance firstly, that individuals who open such accounts understand the nature and purpose of the accounts and ensure that these purposes align with their own goals for opening such accounts. It is also of importance for account managers to understand the legal implications of the accounts created and the legal processes that must be completed before the funds are released, lest they be liable of aiding in intermeddling.[14] As a corollary to these issues as well, it is important that account holders sufficiently disclose the existence of such funds and accounts to their intended beneficiaries as well appointing honest and trustworthy persons as their next-of-kin with such accounts. Such transparency will surely go a long way to ensure the receipt of these funds by the intended beneficiaries.
[1] See Section 1(1) of the Wils Act, 1971 (Act 360)
[2] See Section 1 of the Intestate Succession Law, 1985 (PNDCL 111)
[3] , Commentaries on American Law *501 (George Comstock ed., 11th ed. 1866) as quoted in the 8th Edition of the Black’s Law Dictionary at p 4936
[4] Attorney General v Jones and Bartlett (1817) 146 ER 291
[5] Beddington v. Bauman [1903] A.C. 13
[6] In Ghana, these requirements are stated in the Wills Act.
[7] See In Re Yena, Deceased [1960] GLR 195-201; In Re Nkansah (Decd): Nkansah Alias David V. Okyere [1989-90] 2 GLR 195; David Lamptey V. Rebecca Kwatekai Lamptey (2016) JELR 108213 (HC) ·
[8] See Order 66 Rule 12(1) of the High Court (Civil Procedure) Rules, 2004 (C. I. 47)
[9] KYC, or “Know Your Customer,” is a process banks use to verify the identity of their customers. It involves collecting documents like an ID and proof of address to ensure the bank knows who they’re dealing with. This process helps prevent fraud, money laundering, and other illegal activities by ensuring that only legitimate customers can access banking services.
[10] In Re Appiagyei-Danka (Decd.); Appiagyei-Danka And Another v. Appiagyei-Danka [1973] 2 GLR 188-190
[11] Now the Kwame Nkrumah University of Science and Technology (KNUST)
[12] Ama Serwah v. Yaw Adu Gyamfi and Vera Adu Gyamfi (2018) JELR 64552 (CA)
[13] See Asante-Appiah V. Amponsa [2009] SCGLR 91; Djin v. Musah Baako [2007-2008] 1 SCGLR 686
[14] This is the criminal offence of dealing or dissipating the estate of a deceased person without the grant of probate or letters of administration. See In Re Appau (Decd); Appau v. Ocansey [1993-94] 1 GLR 146—159 for its explanation and possible defences.
BY; KEKELI DZEKETEY ESQ.
Nartey Law Firm is a leading corporate and commercial law firm in Ghana providing legal services to individuals, domestic and international businesses. Ensuring the success of our clients’ objectives is at the core of what we do. Comprised of a dedicated team of lawyers with extensive experience in corporate, commercial and international law and litigation, we pride ourselves with the diligent execution of all client matters, whilst guaranteeing an uncompromising standard with respect to excellence in service delivery. Some of our focus areas are Real Estate, Intellectual Property, Energy, Trade and Commerce, Banking and Finance, Regulatory Advisory, Capital Markets and Mergers and Acquisitions.
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